BOSTON -- When it comes to retirement income, clients are concerned about rising health costs, and they probably also should be concerned about long-term care, said a top executive of Merrill Lynch's Retirement Income Program, in a keynote address here Tuesday at the Retirement Income Industry Association's fall conference.
Bill Hunter, director of Merrill Lynch's Retirement Income Program Management, was discussing some highlights of a 2011 survey his firm had done of clients with annual income of at least $250,000. Though the clients surveyed were affluent, they were still concerned with rising health care costs, Hunter said. In fact, rising health care costs was their number one concern.
However, despite the concern, the clients were not as knowledgeable about all aspects of health care cost management as they believed, Hunter said. For instance, 78% of those surveyed said they believed they were knowledgeable about Medicare. However, a large portion of that same group couldn't correctly identify what's covered by Medicare part A, Hunter said.
Furthermore, more than half the clients surveyed did not have a plan in place to pay for long-term care, Hunter said. "There might be a real need for long-term care," he said.
He told a story about a man in Connecticut who was doing well financially -- well enough to put a few kids through private college and still have enough money to hire a couple of financial advisors. But the financial advisors were focused on things like rare coins and real estate for investment, Hunter said. The advisors never asked questions about the family's health or genetic history, and the man did not have a long-term care plan.
When the man's wife developed Alzheimer’s, it was financially devastating. The kicker: the man is Hunter's father-in-law.
"Never in my wildest dreams did I think I'd be supporting my father-in-law in retirement," Hunter said. Long-term care -- and retirement health costs in general -- are areas financial advisors really must focus on, and help their clients focus on, he said.